SpaceX beat Wall Street's estimates in its first quarterly report since going public, yet the stock tumbled as investors focused on the company's ballooning artificial intelligence spending. Most analysts kept bullish ratings and price targets, though Piper Sandler cut its target to $140.
Space Exploration Technologies fell more than 12% after reporting a smaller loss and higher revenue than Wall Street expected, in its first earnings report since its initial public offering. The Elon Musk-led rocket and satellite company posted a loss of nine cents a share for the second quarter, versus the 26-cent loss LSEG had forecast. Revenue came in at $7.81 billion, above the Street's consensus estimate of $6.93 billion.
However, the earnings beat did little to lift the shares. SpaceX's spending on artificial intelligence surged to more than $23 billion in the first six months of the year, up from $3.3 billion in the same period a year earlier, and capital expenditure in its connectivity and space businesses also increased.
Capex outruns Wall Street's forecasts
The company's quarterly spending told a similar story. SpaceX spent $18.4 billion in capex during the quarter, well above the $13.2 billion Wall Street had forecast, with the bulk going toward its Starship rocket, Starlink expansion and AI compute infrastructure. Its chief financial officer, Bret Johnson, said the heavy spending would continue through the rest of the year.
Wall Street's response, though, remained largely constructive.
Wall Street stays mostly bullish
Bank of America kept a buy rating and a $235 price target, implying nearly 88% upside from Tuesday's close. Morgan Stanley also stayed overweight with a $300 price target. The bank projected $102 billion in full-year 2027 revenue.
JPMorgan raised its price target to $240 from $225. The bank pointed to a new cloud-services contract worth an additional $6.7 billion over six months, starting in October. Wells Fargo, by contrast, trimmed its target to $215 from $230 while keeping an overweight rating.
Piper Sandler breaks from the pack
Piper Sandler was the outlier, cutting its price target to $140 from $156 while maintaining a Neutral rating, even as it raised its profit estimates. The firm flagged the expected 140% increase in tradable shares as a source of selling pressure. It also pointed to projected fiscal 2027 capital expenditure of around $65 billion, which it called higher than anticipated.
SpaceX shares traded around $111.12, well below the company's $135 IPO price.
Sources: CNBC, Investor's Business Daily, CoinGape
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